As a result, the balance showcased in the bank passbook would be more than the balance shown in your company’s cash book. In addition to ensuring correct cash records, the bank reconciliation process also helps in keeping track of the occurrence of any form of fraud. Such insights would help you as a business to https://www.bookkeeping-reviews.com/ control cash receipts and payments in a better way. All deposits and withdrawals undertaken by the customer are recorded both by the bank as well as the customer. The bank records all transactions in a bank statement (also known as passbook) whereas the customer records all their bank transactions in a cash book.
- Next, we look at how a bank uses debit and credit when referring to a company’s checking account transactions.
- Errors in calculation or recording of payments are more likely made by business staff than by a bank.
- Nevertheless, while bank errors are very rare, it is still a possibility.
- The business needs to identify the reasons for the discrepancy and reconcile the differences.
- It includes sections to add any deposits or charges not yet reflected in your checkbook, ensuring you have an accurate picture of your financial situation.